What Ended the Great Depression?

53 Pages Posted: 27 Apr 2000 Last revised: 20 Jun 2021

See all articles by Christina D. Romer

Christina D. Romer

University of California, Berkeley - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: September 1991

Abstract

This paper examines the role of aggregate demand stimulus in ending the Great Depression. A simple calculation indicates that nearly all of the observed recovery of the U.S. economy prior to 1942 was due to monetary expansion. Huge gold inflows in the mid- and late-1930s swelled the U.S. money stock and appear to have stimulated the economy by lowering real interest rates and encouraging investment spending and purchases of durable goods. The finding that monetary developments were crucial to the recovery implies that self-correction played little role in the growth of real output between 1933 and 1942.

Suggested Citation

Romer, Christina D., What Ended the Great Depression? (September 1991). Available at SSRN: https://ssrn.com/abstract=226730

Christina D. Romer (Contact Author)

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